The price of iron ore rose some 0.8% to $135.10 for the week ending July 6, 2012, from $134.oo last week. The price of iron ore has been relatively stable for the past two months now, trading in a range of $130-140/tonne.
The post-recession low was $59.10 on March 27, 2009, while the high was $190.19 on February 17, 2011.
Source: The Steel Index
Weekly domestic raw steel production fell by 0.6% to 1.869 million tons (mt) for the week ending July 7, 2012, from last week’s 1.881 mt, but up some 0.9% compared to the year-ago level. The lowest production level since the recession began was 800,000 tons for the week of December 27, 2008. The highest level since the recession began was 2.005 mt for the week of May 12, 2012.
We would caution readers that only half of the AISI reporting companies release their weekly production in “real time” so the other half of this data is estimated – using prior months’ reported production & operating rate. What this means is that when business is improving or deteriorating, the weekly data has a meaningful lag.
Capacity utilization also fell from 76.1% last week to 75.6% this week, slightly below the year-ago level of 75.8%. The lowest capacity utilization rate since the recession began was 33.5% for the week of December 27, 2008; the highest was 81.1% on May 12, 2012.
Source: AISI and Steel Market Intelligence
Steel Market Production Cuts – ArcelorMittal has reportedly failed to rule out making more cuts in Europe with the company’s CEO citing severe imbalance in steel supply and demand, although a company spokesman said that no further plans have been announced.
Steel Market Production Increases – Indian steelmaker SAIL plans to complete its plant expansion program at five of its integrated plants by next year – for a 70% increase in crude steel capacity to 23.4 million tonnes per year (mtpy) from the current 13.8 mtpy.
Sources: Steel Business Briefing, FinancialTimes
Steel Market Production Cuts – ArcelorMittal plans to curtail output at its 4.4 million tpy flat product works in Ghent, Belgium by 10-15% in the third quarter of 2012 due to the current economic situation.
Steel Market Production Cuts – Scheduled maintenance outages at major cold rolled mills in China this month will reduce output by a total of 140,000-150,000 tonnes of CRC.
Steel Market Production Cuts – Italian producer Lucchini group has announced it will be idling its Piombino, Italy blast furnace for four straight weeks in August – up from the scheduled one week – due to weak market conditions.
Steel Market Production Cuts – Japanese steelmaker Nippon Steel was forced to bank its No. 2 blast furnace at its Kimitsu Works after a coke spill and fire on Tuesday – the company planned for the furnace to be restarted on Thursday.
Steel Market Production Increases – Indian steelmaker JSW plans to increase production capacity at its Vijayanagar works by 2 million tpy to 12 million tpy by March 0f 2013.
Steel Market Production Increases – Russian billet producer Frolovo Volga-Fest plans to restart its 270,000 tpy EAF billet plant in the Volgograd region next week – the plant has been closed since late April for maintenance.
Sources: Steel Business Briefing
The number of active oil and natural gas rigs in the United States rose 0.3% to 1,965 for the week ending July 6, 2012, rising from the two-month low of 1,959 last week. The rig count is 4.1% above the year-ago level.
The highest weekly rig count in the United States since 1940 was recorded on December 28, 1981, at 4,530; the lowest was recorded on April 23, 1999, at 488.
The number of rigs in Canada rose again this week by 1.2% to 264 compared with 261 last week and the highest count since March 30, 2012. Despite the increase, the count is down 20.2% from the year-ago level.
The highest rig count for Canada was 727 on February 3, 2006; the lowest was 29, recorded on April 24, 1992.
Source: Baker Hughes Inc.
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While Nucor, US Steel and ArcelorMittal now joining the ranks of domestic players adding a $40/ton increase to spot pricing adds credibility to this move, we suspect that recent firming in the domestic order book is fragile; with domestic HRC prices currently at around parity with global pricing levels, the lowest level in 9 months.
We say fragile because while domestic markets will benefit from local mill maintenance, a lower operating rate, and some worries about strike risk at US Steel and ArcelorMittal, the risk of imported material increasing is high.
Our full report provides further thoughts about domestic and global steel prices as well as the implication for steel equities.
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The June ISM Steel Survey continues to reflect American manufacturing’s scaled-back expectations for the US economy and their own business outlook. More buyers are worried about their own near-term outlook and the economy, and more buyers are scaling back expansion plans and hiring.
The only pickup we see in the survey this month is in foreign steel mill quoting activity, astonishing since domestic prices have scaled back to levels comparable to most foreign home market prices, so if economics were driving foreign deliveries, these should be declining.
Our full report is available to subscribers and provides further thoughts on the June ISM steel survey as well as implications for the steel industry and equities.
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According to the Steel Import Monitoring and Analysis (SIMA) licensing program, June steel import licenses declined 4.9% to 2.54 million tonnes (mt) from May’s 2.67 mt. The overall decline was driven by weakness in the sheet market, as total sheet imports dropped 12.8% from May’s level, and are now down 26.3% from a multi-year high in April. Semi-finished licenses bucked the overall downtrend, rising a modest 4.4%, as Brazilian semi-finished tonnage jumped some 81.7% in June, following a 41.8% fall to a year low in May.
Bucking the overall downtrend, June Chinese imports are poised to potentially reach the highest level since early 2009 (just before the huge Chinese oil pipe case was filed), while Korean tonnage looks set to increase 9.4% from May levels to near record levels.
Our full report is available to subscribers and provides further thoughts on June import licenses as well as our outlook for the coming months and implications for steel equities.
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Steel Market Production Cuts – The Serbian Government has announced a change in plans for the 2.4 million tpy capacity Zelezara Smederevo plant, with the No. 2 BF at the plant now scheduled to be closed from July 10 until September 1.
Steel Market Production Cuts – German Steelmaker ThyssenKrupp is reportedly considering cutting work hours at its German operations in light of slowing steel demand.
Steel Market Production Increases – Mexican bar and sections producer Simec has begun production on a new plant in Sao Paolo, Brazil with some 500,000 tpy wire rod and rebar capacity that is scheduled to begin operating in 2013.
Sources: Steel Business Briefing, Reuters
Steel Market Production Cuts – Japanese steelmaker JFE plans to cut H beam production by 10% for the months of July through September from April through June.
Steel Market Production Cuts – Chinese steelmaker Xinyu Iron & Steel will be performing maintenance on its HRC and plate production line in July for a total lost output of 80,000 to 100,000 tonnes.
Steel Market Production Cuts – Chinese steel producer Shougang Changzhi began maintenance on its H beam production line on June 28 with production slated to fall by a total of 15,000 tonnes over the course of the 8 day outage.
Steel Market Production Cuts – Gerdau Long Steel North America shut down its steel mill in Jacksonville, FL on Tuesday of last week due to flooding from Tropical Storm Debby though production at the rolling mill and EAF was able to restart on Thursday.
Steel Market Production Increases – Italian plantmaker Danieli group is planning to quickly restart production at the 120,000 tpy Croatian seamless pipe mill, Zeljezara Sisak that they purchased recently purchased from Commercial Metals Company.
Sources: Steel Business Briefing, SteelGuru, Commercial Metals corporate website
